(20 October 2022 – Australia) Less than one in five ASX200 enterprises disclose the financial impact that climate risks could have on companies with their shareholders according to a new review of large Australian corporates environmental, social and governance (ESG) reports by PwC.
Despite ESG reporting improving gradually, a significant amount of work needs to be done in terms of communicating their explicit climate, gender and reconciliation policies if indeed they have a policy in place whatsoever.
Australian enterprises are falling short of the expectation to disclose not just their goals for reducing carbon emissions, but how climate risks may affect the financial performance of the business or its valuation. The PwC analysis compared how company disclosures compared against new draft standards for sustainability reporting from the International Sustainability Standards Board (ISSB) which are under review and are likely to form the global standard moving forward.
While 55 percent of companies identified climate change as an emerging risk, only 18 percent share details with their shareholders about how their financial position may change over time because of climate risks, or the financial opportunities on offer if they take action on climate issues. 49 percent of firms outlined a net-zero commitment, an increase of 13 percent year-on-year.
Major retailers have outlined comprehensive sustainability policies since 2020, including net-zero carbon commitments, however the difficulty of tracking indirect and supply chain emissions or “scope 3 emissions” remains an issue. A review of the retail sector by Microsoft found one in four corporates were not confident of achieving their net-zero targets.
“If the work doesn’t go in now, there’s a risk we’re not ready for these ISSB standards. And we are in catch-up mode – Europe is further advanced than us” commented PwC Australia Assurance Leader, Kristin Stubbins.
“It’s a bit astounding that not everybody is disclosing their policy in this day and age. This has become a market issue… Customers care about it, investors care about it. I think you are going to find that if companies aren’t taking it seriously, they will suffer” Stubbins added.